Movie Gallery says lenders extend default deadline

Dothan-based Movie Gallery Inc. said this morning that some lenders have agreed again to give the company additional breathing room on debt payments.

It's the second time this month the lenders have extended a deadline with the Alabama company, which has more than $1 billion of debt.

Movie Gallery said today the lenders have agreed not to take action on defaults on loans totaling $725 million and on any new defaults before Sept. 30. The prior date was Aug. 27.
The nation's second largest video rental chain said this month it may not have enough cash to continue operating.

CEO Joe Malugen said the extension "allows us time to continue to develop our long-term restructuring plan while we accelerate our current store rationalization process and take other steps to conserve cash and improve profitability."

The company has struggled with debt since buying Hollywood Entertainment for $1 billion two years ago.